N°23-73: Commercial Real Estate Prices in Europe After COVID-19

We analyze the behavior of commercial real estate prices after the COVID-19 pandemic, emphasizing differences across property types. For that purpose, we use national and city level direct real estate data for the 10 largest countries in terms of market capitalization, as well as listed real estate data. We find that the recent rise in interest rates and geopolitical instability have affected prices differently across sectors. Industrial properties benefited from the pandemic although prices declined significantly in 2022. Residential properties continued their upward price trend and have been the best-performing property type during the last two decades. Retail real estate continued its downward price trajectory. Thus far, office markets do not appear to be significantly affected by structural changes in the sector. Finally, data for listed real estate markets in Europe suggest that markets bottomed out in early 2023.